GLOBAL WINNER: FIRM OF THE FUTURE 2018
Meet the other finalists:
One of the hardest things about moving to the cloud is the shift in pricing models from hourly billing to a fixed fee. Some firms publicise fixed fees and modify them to fit clients, while a rarer few will explore pricing theory to come up with the best match.
Tanya Hilts of Cloud Bookkeeping Services in Canada has invested a lot of time trying to understand the art and science of value pricing. She has studied under pricing guru Ron Baker and learned the hard lessons testing out prices on her own clients.
This skill is useful to all SMEs. Hilts now helps her business clients price their own services and products – a welcome service that can improve sales volume and margin.
|Name of Company||Cloud Bookkeeping Services|
|Location of Company||Belleville, Ontario Canada|
|How long have you been in business?||31|
|Number of staff?||3|
|Number of clients?||39|
|Staff to client ratio||13|
|Do you outsource bookkeeping or accounting work?||No|
|What % of your clients are on value pricing/fixed fee?||90|
|What % of your clients are on cloud accounting software?||99|
|What % of your clients are on QBO?||99|
Digital First: Why do you think you are a finalist?
Hilts: I think it has to do with education. There are a lot of other firms doing the same thing, moving to the cloud, selling advisory services.
The real difference is the educational component. We are educating our clients and bookkeepers through our bootcamp program. How to turn around and offer true advisory services and take those services to the next level.
Digital First: What are true advisory services?
Hilts: That to me means moving away from the old days when we were reacting with the data. We can now be proactive – start to advise the client and help with their decisions. We learned very quickly that everything that we added to our practice such as value pricing we could teach to other services business.
A lot of our clients don’t want to pay for advisory services. So we give it to them for free for three months and show how it works. We select clients that are a good fit for this and we can show them the value.
They are taken to the next level without really realising it, just by us partnering with them to help them grow their business.
Digital First: Which type of client is a good fit?
Hilts: Ideally service based business. We have many in retail but it’s not as easy. They want us to take a look at staffing needs and inventory needs. We can’t teach them the same sort of things. Our first client had a podcast business and we taught him to value price. He offers gym membership support plans to clients who wouldn’t have used podcasting services to begin with. He lets them pick certain times (to go to the gym) on smaller packages. If they don’t use the slots that’s ok, because now he’s got income even if no-one is coming to the gym.
He sends out an email every day saying here are the slots you can use. He’s been making $1,000 a month in residual income from clients who would not have used his services before, by filling slots he wouldn’t have filled with his regular clients. It’s like sampler packages – someone might only use the services every two or three months.
Digital First: Why is value pricing so important to your clients?
Hilts: Value pricing is about how you’re offering value to clients, and the value and efficiency in the firm. Sometimes it’s how you position things to clients. Clients need to know how it will help them and benefit them. So part of the education is how to position it in a way that makes sense to our clients’ customers.
Digital First: How did you train yourselves in value pricing?
Hilts: In 2012 Intuit had (value pricing guru) Ron Baker do a four part series. I watched it and I was really intrigued. I watched every single video and cyberstalked Ron and Mark Wickersham. Then I was lucky enough in 2014 to be a member of the Black Swan program and I mentored under Ron for nine months. I learned so much from him.
And then it’s just been a matter of modifying it because it’s not the same for every client. That took time to learn how to do that. It sometimes meant I priced clients too high and lost them, or too low and lost money. So there was a large learning curve for that as well.
|What apps do you use for productivity?||Microsoft Exchange, Slack, Google Drive|
|What apps do you use for workflow?||QBOA Practice Management, 17Hats|
|Tax and Statuory accounts?||QBO, Profile|
|Document storage?||Google Drive, SmartVault|
|Expense management?||Receipt Bank, Hubdoc|
|Management reporting?||DryRun, Chata.ai|
Digital First: If you compared your profitability before Black Swan?
Hilts: In three years we went from an average of $40,000 gross to over $200,000 gross this year. I have personally been able to bring home double compared to the year that we grossed $40,000.
It was just myself originally. Now we have two of us and another joining full time in November.
Digital First: Can you train your other staff to do value pricing with clients?
Hilts: Currently I’m the principal person and I have my pricing partner Leanne who is my operations leader. I’m sure she could easily price someone on her own. Her main role is sales and marketing. She brings the clients in and we sit down with all the information from the client. Sometimes she thinks I’m too high, sometimes I’m too low. I think you do need a pricing partner because I think it’s natural to undervalue ourselves. Leanne has enough that she could probably do that, we just don’t price alone. If I needed to be away I trust that she would use our template.
Digital First: How do you manage the onboarding process, which you can automate more easily with fixed fee packages? Isn’t it more inefficient to do value pricing?
Hilts: We don’t call what we do value pricing, it’s right-sizing. The right client on the right package for the right price. I have a formula – and it’s not always right – as long as I basically know how many bank transactions. It’s a little bit based on numbers and the type of services they want and their pain points. We pull together pricing for three packages. Our middle package is where we want them to be.
There’s not a big difference between the small and middle packages, and the big one has more advisory services and can handle more pain points. The small solves one pain point, the medium solves two, and the big package solves three or more pain points. The price also includes the type of apps we might have to bring in to solve these pain points, or the level of knowledge required to solve.
It’s not easy to come up with the pricing but we have come up to a pretty good process.
Digital First: Do you have a list of pain points?
Hilts: It depends on the information we collect from the client. We have some questions to understand their business. In between the questionnaires and our notes they may have an issue with accounts receivable. We can bring in an app like Invoice Sherpa. Another client may not understand why they’re not profitable, so we might bring in a cashflow app. Each conversation is different depending on what’s happening with clients.
Digital First: How many apps do you need to be familiar with to address client pain points?
Hilts: We are aware of a lot of the apps out there but we have a small base we like to pull from. We follow KISS (Keep It Simple, Stupid). We have our favourites for cash flow, forecasting and budgeting. We are aware of the differences. If we know someone who comes in with something unique. We probably have I’d say around eight or so that are in our immediate toolbox and then 10 or so that are on the fringe. Some clients may only need two or three.
Every client has QuickBooks Online, Receipt Bank and HubDoc.
Digital First: You use Receipt Bank and HubDoc together?
Hilts: We do. Receipt Bank is awesome, their phone app is great. We have a few clients that that use HubDoc for fetching bank statements. The odd client may just use HubDoc – like charities which want everything arranged and we can pull reports a little easier for them versus in Receipt Bank.